Manitowoc’s recent correction is an opportunity to buy into the rapidly rebounding crane-making business, writes Michael Cintolo, editor of  Cabot Top Ten Weekly.

I’ve written frequently about popular stock-market leaders like Netflix (Nasdaq: NFLX), Baidu (Nasdaq: BIDU), and F5 Networks (Nasdaq: FFIV) being "late-stage."

And I usually get a few emails about that: "Why would you say XYZ stock is late-stage if its story is so good and its earnings growth (even its earnings estimates) is so strong?"

The answer is relatively simple. History tells us that—no matter how good the story or earnings—growth stocks tend to have a shelf life.

At first, a growth stock and story are relatively undiscovered. As time goes on, more people discover the story and buy the stock, driving it up. But after a year or two, pretty much everyone knows the story—and thus, most investors have already bought their position.

For example, does anyone not know that Netflix has a great streaming-video business? Does anyone not know that Baidu is strong because it’s the leading online search player in China?

Don’t Be So ObviousIn other words, these names become relatively obvious—and in the stock market, the obvious rarely works for long.

There have recently been numerous breakdowns among these later-stage stocks, such as F5 Networks, Amazon.com (Nasdaq: AMZN), Salesforce.com (NYSE: CRM), and possibly Netflix, which is looking very heavy.

The market is an odds game, so when looking for stocks that can make major up moves in the months ahead, it’s usually best to hunt for newer merchandise—possibly a stock or sector that just lifted off a few months ago, or one that has already passed through a major, multi-month correction and base-building phase to get rid of all the weak hands.

Assuming these stocks also have a great story and outstanding growth, these "fresher" names often have more upside potential.

Crane Maker Due to Get a LiftWith that in mind, my stock idea is Manitowoc (NYSE: MTW), which is in the exciting business of...cranes. Seriously.

The big idea here isn’t that the company has something terribly new and exciting, but that as one of the largest crane operators in the world, Manitowoc is highly, highly leveraged to the business cycle—and when business is good, it’s very good.

The company’s business was in tatters for much of the past couple of years, but that changed in the fourth quarter of 2010. Earnings, while still low, beat estimates by a wide margin—and more importantly, Manitowoc’s backlog for its crane business soared 28% from the previous quarter.

Combine that with optimistic words from the firm’s top brass on the conference call, and institutional investors took it as a sign the upturn had begun.

And so these big fish bought shares—a lot of them. Manitowoc soared nearly 40% in the aftermath, on volume that was more than three times average. Better yet, this move took the stock out of a nine-month basing formation—really, the stock’s first major launching pad of the bull market.

Said another way, MTW is not "over-owned" by the institutional crowd, or overly obvious to the retail crowd. If anything, we think many big fish will be trying to build positions over time, as it’s a relatively sure bet that this company’s earnings have bottomed and will head significantly higher in the quarters to come.

During the market’s recent bout of indigestion, Manitowoc fell from nearly $22 to around $18.50, but has held up well since, still meandering just south of $20.

Shares might need a few more days or weeks to consolidate, but I think buying in this area, or on weakness into the $18 range, will work out over time. Manitowoc is likely still in the early stages of a big-picture advance that should play out over months.

[You don’t always need an obscure stock to succeed, however. A month ago, Cintolo recommended  the red-hot shares of OpenTable (Nasdaq: OPEN), which have continued to gain ground—Editor.]

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